USDCAD open: 1.3933, overnight range 1.3928-1.3946. close 1.3942
USDCAD meandered aimlessly and traders are not motivated as they await US CPI numbers due tomorrow. The lack of actionable US and Canadian economic reports is another factor weighing on activity.
USDCAD gains are hampered by narrowing CAD/US interest rate spreads and by the reported CAD demand as speculative short positions get unwound.
WTI oil rose 1.9% overnight and reached 84.61/b before dropping to 83.31 in NY. Hopes for the Strait of Hormuz reopening faded with Trump and Iran both demanding compensation from each other.
USDCAD Technicals
The intraday USDCAD technicals are bearish below 1.3990 and looking for a break below 1.3910 to extend losses toward 1.3870. A move above 1.3990 targets 1.4020.
Longer term, a break below the 100-day moving average at 1.3917 opens the door to a drop to the 200-day moving average at 1.3857. Below that, the 0.618 Fibonacci retracement at 1.3833 becomes the next support, and a break there opens the door to 1.3721, the 0.786 retracement. USDCAD selling is approaching oversold levels.
For today, USDCAD support is at 1.3910 and 1.3870. Resistance is at 1.3990 and 1.4020.
Today’s expected range is 1.3910-1.3990.
FX Heat Map
FX open high low 6:00 am
Point-Counterpoint
Trump claims the US has 100% control of the Strait of Hormuz. The Strait of Hormuz monitor shows just 2 ships have sailed through in the past 24 hours. Who is lying? Iran is demanding compensation from the US for the destruction caused by Operation Epic Fury and other attacks, along with an end to the blockade and sanctions. Trump laughed and said he wants compensation from Iran for all the people murdered by the regime.
WTI oil prices have recouped almost all of August’s losses and are $84.26/b today. The move helped to drive US Treasury yields higher on inflation fears. The US dollar is little changed ahead of tomorrow’s CPI data and a lack of actionable economic reports in Europe and the US today.
In Asia, Japan’s Topix rose 0.62%, Australia’s ASX 200 gained 0.19% while Hong Kong’s Hang Seng index fell 1.10%.
As of 5:30 am PT, The UK FTSE 100 and the French CAC 40 are flat, while the German Dax is up 0.25%. S&P 500 futures have gained 0.18%,the US 10-year Treasury yield is 4.696%, the DXY is 99.86 and gold is 4,394.80.
EURUSD | Range 1.1531-1.1550
EURUSD is lethargic. It may be due to the sweltering heat that has been baking the Eurozone for weeks, or maybe because of the large number of participants and central bankers that have gone on vacation but whatever the reason, FX trading is quiet. Furthermore there were no actionable economic reports available either, leaving EURUSD modestly bid above 1.1500.
GBPUSD | Range 1.3493-1.3516
GBPUSD drifted sideways in a quiet session. Traders ignored BRC like-for-like retail sales which rose 1.0% in July (forecast 1.5%, June 1.7%). They also ignored a Barclays Bank consumer confidence survey which was at its highest level in 2 years. GBPUSD is bullish above 1.3450.
USDJPY | Range 158.93-159.39
USDJPY inched higher with traders skeptical of chatter that the BoJ may be leaning towards a faster pace of tightening later this year. Higher oil, a firmer US yield backdrop, and a belief that intervention won’t occur until prices are a lot higher, are supporting prices.
AUDUSD | Range 0.7039-0.7069
AUDUSD bobbed and weaved after the RBA left rates unchanged at 4.35%, as expected. The statement warned that higher rates were “quite possible” and pushed out the timing for inflation to fall to target.
USDMXN | Range 17.1159-17.1581
USDMXN is steady in a narrow range. Prices continue to be weighed down by interest rate spreads, favouring Mexico while traders have ignored the rise in oil prices, for now.
CHINA
- PBoC Fix: 6.7900 vs exp. 6.7497 (prev. 6.7884)
- Shanghai Shenzhen CSI 300 fell 0.81% to 4,663.79
Sources: Investing.com, Bloomberg, Reuters, Yahoo Finance, US Census Bureau, Trading Economics, Tradingview
